Quotes of the day

posted at 10:19 pm on November 28, 2012 by Allahpundit

Republican unity against raising tax rates for the wealthy began to show cracks on Wednesday after a conservative congressman said he would back an agreement with President Barack Obama to raise rates on the rich but extend tax cuts for income below $250,000.

“If we have an opportunity to, right now, secure the Bush tax cuts for 98 percent of the American people … and then continue to fight on these other issues, I think we should do that,” Cole, a conservative Republican from Oklahoma, told Reuters in an interview.

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Speaker John Boehner (R-Ohio) on Wednesday shot down a proposal by a senior GOP lawmaker that the House agree to President Obama’s demand to extend middle-class tax rates as Republicans sought to put the focus of negotiations on spending.

The Speaker’s swift rejection of an idea floated by Rep. Tom Cole (R-Okla.), a respected party strategist and former chairman of the House GOP campaign committee, came as Republicans voiced increasing concerns that the debate over the so-called “fiscal cliff” had become dominated by talk of taxes rather than spending.

As of Thursday, Congress has only 10 legislative days left before the cliff plunge, yet President Obama and House Speaker John Boehner (R-Ohio) haven’t met in 13 days, and reportedly haven’t spoken on the phone all week. Staff-level talks have produced little progress. Instead, both sides have embarked on a campaign of photo ops with business leaders and middle-class taxpayers aimed less at persuasion than at avoiding blame once the cliff — a combination of huge spending cuts and tax increases — is reached…

Eventually, any deal to restore the nation’s finances will have to look something like the Simpson-Bowles proposal, which combines tax increases and cuts to entitlement spending. There is no viable alternative to their core formula. Yet the threat of a crisis doesn’t seem to be enough to spur action; lawmakers are apparently content to wait for an actual crisis — and Simpson and Bowles are passing the time as scolds and jesters.

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With a chip on his shoulder larger than his margin of victory, Barack Obama is approaching his second term by replicating the mistake of his first. Then his overreaching involved health care — expanding the entitlement state at the expense of economic growth. Now he seeks another surge of statism, enlarging the portion of gross domestic product grasped by government and dispensed by politics. The occasion is the misnamed “fiscal cliff,” the proper name for which is: the Democratic Party’s agenda.

For 40 years the party’s principal sources of energy and money — liberal activists, government-employees unions — have advocated expanding government’s domestic reach by raising taxes and contracting its foreign reach by cutting defense. Obama’s four years as one of the most liberal senators and his four presidential years indicate that he agrees. Like other occasionally numerate but prudently reticent liberals, he surely understands that the entitlement state he favors requires raising taxes on the cohort that has most of the nation’s money — the middle class.

Mitt Romney as candidate and others before and since have suggested increasing revenue by capping income tax deductions. This would increase that tax’s progressivity, without raising rates that would dampen incentives. Obama’s compromise may be: Let’s do both. Remember the story of when the British Admiralty sought six new battleships, the Treasury proposed four, so they compromised on eight.

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Who actually has the leverage in negotiations over the fiscal cliff—and the extension of Bush-era income tax cuts in particular? On the surface, it might look like Democrats, who control the White House and the Senate, have the upper hand. But House Republicans may have more leverage than is immediately apparent…

We already have a pretty good clue to how the White House will act—not what the administration is saying now, but how it actually acted in 2010, the last time the Bush tax cuts were set to expire. Then, as now, doing nothing would have allowed tax rates to rise. And then, as now, the president insisted that he would not extend the Bush tax cuts for top earners. But he did anyway.

Asked at a press conference earlier this month why this time would be different, President Obama suggested that the economy was better this time around. In fact, it’s growing at the same pace. Which is to say that Obama didn’t have a very good answer, because this time isn’t all that different. And while a different outcome is possible, especially if the GOP follow’s Rep. Cole’s advice, it’s not the most likely scenario.

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But there is a profound lack of curiosity when it comes to the other half of this supposed bargain. Remember that hypothetical deal of $1 in tax increases to $10 in spending cuts? Republicans are still being asked about it and criticized for rejecting it. But balancing the budget under that formula would require $9 trillion in spending cuts over the next ten years. When was the last time the president or a Democratic congressman was asked whether or not they would agree to such a deal?

In fact, many Democrats actually want to spend more, at least in the short term. The president’s most recent budget calls for $2.6 in increased spending between now and 2022. That’s $1 trillion more than the $1.6 trillion that the president has called for in new taxes. Therefore, the tax hikes would not be used to reduce the deficit, but to finance new spending. And, according to news reports, the president has already floated the idea of still more stimulus spending as part of the fiscal-cliff talks.

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Obama does in fact want to take the country over the cliff. It’s win-win-win-win-win.* He gets to raise taxes (including on the middle class, which he needs to pay for his welfare state), he gets some cuts to the the military he despises, he gets cuts for Medicare (not part of his coalition), he gets to blame the GOP for all of this, and, bonus, he gets to claim the coming recession he’s already engineered is the GOP’s fault, too.

Hennessey’s first point is probably true. Going over the fiscal cliff without a deal will probably result in a recession. But his second point may not be true. While a recession would be terrible for the country, it may not be terrible for the Obama presidency. Obama knows that he has the media standing by to blame Republicans for any failure to reach a deal, and he knows that there are enough low-information voters out there to believe whatever the media says. The media covered for him both on Benghazi and the fiscal cliff during the elections; it’s likely to keep covering for him. He also knows, based on his own re-election victory, that a terrible economy leads to more dependency on government, which leads to more people seeing him and his party as the guarantors of their government benefits. This dynamic is a very effective way to kill arguments favoring smaller government. Who needs abstractions and Milton Friedman when there’s no food on the table?

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The co-chairman of President Barack Obama’s 2010 fiscal commission said it’s unlikely the president and Congress will reach a deal by the end of this year to avert the so-called fiscal cliff.

Erskine Bowles, also a former chief of staff to President Bill Clinton, estimated there is a one-third probability the sides will strike a deal by the end of this year. Speaking today at a breakfast in Washington sponsored by the Christian Science Monitor, he said there’s another one-third chance that all sides will reach a deal early in 2013.

Good post! I admit I am having trouble keeping up with what the R’s in congress can actually do about anything. There is so much noise, but not much clarity. It seems they should be having these fights in budget committees and the floor of the house rather than these last minute fiscal cliffs used by Obama to make everything a freaking crisis.

Yippee! Lets make the already undecipherable tax code more complex. This would be a boon only for Big Accountant. They should stop tinkering around the edges and chuck the whole thing. Ask everyone for 10% and that way the rich will be paying more so the libs should be happy, too.